Three Tips for receiving the best Student Loans
Student loans are something you get when you are going to college or university. These loans are used specifically for college tuition and books and might also provide enough money to pay for all or a portion of living expenses while you are in school.
The interest rate on student loans is substantially lower than other loans and the payment schedule can be deferred while you are in school. Paid back over a longer period of time, a student loan usually accrues interest while you’re in school and you rarely have to pay for the loan until you’ve been out of school for a few months.
Tip Number One
File for Federal Student Loans first, through the free online Federal Application for Federal Student Aid or FAFSA. Without this application and the Student Aid Report (SAR) that tells you what you qualify for, you won’t have access to federal student loans. Many of the federal student loans are not based on need or your income.
The federal government in the United States has a federally guaranteed student loan program. The program also includes a complete financial aid package that could include scholarships, grants, or work study options. Most US students qualify for some type of federal student aid, it is important that every student start with the federal student aid and loan program.
To fill out the FAFSA, first you need a pin number. The pin is used to sign the Free Application for Federal Student Aid or FAFSA if you apply online. If you mail in your application, you can still use the pin to access and correct a processed FAFSA at a later time. Go to www.pin.ed.gov and set your pin number. If your parents’ information is going to be included on the FAFSA, you will need one of them to sign the application as well. Your parents should get their own pin number.
The FAFSA site is at www.fafsa.ed.gov. Follow the process, there is no fee to do this and you should never pay someone to fill out the FAFSA. It is a free government form. Once you’ve submitted the application, eventually you’ll receive a Student Aid Report. This report will list your availability and approval for all student aid; including approval for government funded and partnered loans.
Tip Number Two
Always use federal loans first. The federal loans are know by names like the Perkins, Stafford, and PLUS loans. These lower, fixed interest rate loans will often have more favorable terms than private student loans. If you are looking at private loans, look at all the costs. Private loans can have higher interest rates, different ways of compounding interest, and origination fees.
Because private student loans are based on your credit score, know what it is. Most private loans will have interest that fluctuates over time. Read the information and know what all the charges and rates are.
Tip Number Three
Make sure you know if your loan has borrower rewards and what the specifics are on your loan if there are borrower rewards.
What are borrower rewards?
These rewards or loan discounts are reductions and waivers that can save you money on your loan. Some of these discounts you get just because of the type of loan you have, others you earn. Sometimes there are rules to follow to get the discounts, like having your payment taken directly from your bank account or making all your payments when due.
A sample of the type of rewards or discounts are, rate reductions, fee waivers, principal reductions, cash rebates and a possible waiver of final payments.
These discounts or rewards can make a big difference on your monthly payments and total cost. One example of a possible savings is a loan that gets a 3.75% reduction on principle if there were 36 on time payments. Another lender gives a .25% interest rate reduction if there are automatic payments for paying the loan.
When you are checking out student loans, look for these features and benefits and make sure you understand what you need to do to get the rewards. Then make sure you follow the rules and get these rewards. The lenders offer it as a benefit, and then hope you won’t use them. Figure it out and follow through for better pricing. If you already have a student loan, call your lender and get a list of the rewards.
loading...
